DirecTV Settles Ad Suit

Cable TV company Time Warner Inc. has announced a settlement of a dispute with satellite operator DirecTV over its ads for high-definition TV.

The companies told the Wall Street Journal (sub. req.) they had reached a “mutually satisfactory” resolution of Time Warner’s false-advertising suit. Details were not available. Time Warner had claimed the ads falsely claimed DirecTV’s HD service was superior.

The announcement comes the same day as a federal appeals court ruling that was a partial loss for DirecTV. The court gave DirecTV the go-ahead to run Internet ads touting the quality of its high-definition TV, but refused to lift an injunction barring TV ads featuring William Shatner and Jessica Simpson.

Ads that imply false messages can violate the legal ban on false advertising, the 2nd U.S. Circuit Court of Appeals said in the opinion released today. The New York City-based appeals court found the Simpson and Shatner ads may create a false impression.

“We hold that an advertisement can be literally false even though it does not explicitly make a false assertion, if the words or images, considered in context, necessarily and unambiguously imply a false message,” the court said.

The Simpson commercial features her in a reprisal of her Daisy Duke role. “You’re just not gonna get the best picture out of some fancy big-screen TV without DirecTV,” she says as she takes an order at a local diner. “It’s broadcast in 1080i. I totally don’t know what that means, but I want it.”

Shatner plays Captain Kirk. “With what Starfleet just ponied up for this big-screen TV, settling for cable would be illogical,” he says.

The appeals court said the Simpson commercial implies it is impossible to obtain 1080i resolution from any competitor, a claim that is “flatly untrue,” the appeals court says. It also said a lower court was not clearly erroneous in its finding that the Shatner commercial as a whole falsely claimed cable HD quality is inferior to DirectTV’s.

The court, however, lifted an injunction on Internet ads that had depicted cable TV as blurry, saying they were akin to puffery.

“The Internet advertisements’ depictions of cable are not just inaccurate; they are not even remotely realistic,” the appeals court said. “It is difficult to imagine that any consumer, whatever the level of sophistication, would actually be fooled.”